In the beginning of 2009, a man or group of people that use the name Satoshi Nakamoto released the first bitcoin wallet and with that started the era of a whole new type of currency: the cryptocurrency. Although most people have probably heard of bitcoin by now, the concept and the idea behind both bitcoin and alternate cryptocurrencies are still unknown to most.
Cryptocurrency is a new type of currency which, unlike normal currencies, is not regulated. Instead of having a central organization or government regulate and create the currency, a predefined amount of coins will be created by a network of computers. Anyone with a computer and the right software can join this network.
The network of computers is not only important for creating (mining) new coins however, it also serves as a transaction log and all computers in the network will have to confirm all transactions that are made. When a transaction is made, and the majority of the computers have confirmed it, the transaction is considered final and acknowledged as ‘real’.
As mentioned before, cryptocurrencies are not backed by any government and/or bank and thus the value has to be determined by the market.
When it comes to cryptocurrencies, the bitcoin can be seen as the leader of the pack. It was the first cryptocurrency that was released and ever since its introduction it has remained the cryptocurrency that received the most attention and support from internet users around the world.
Aside from exchanges where bitcoins can be exchanged for normal currencies, there is an increasing number of (online) retailers and service providers that have started accepting bitcoin payments. Examples service providers and retailers that now accept bitcoin are Overstock, Tesla, Tigerdirect and Mega.co.nz. The increasing acceptance of bitcoin has strengthened bitcoin’s position as the number one cryptocurrency.
After bitcoin was launched, other developers saw potential in the idea behind the new currency and as a result they soon began working on their own cryptocurrencies. Initially there were only a handful of alternate cryptocurrencies, but the more popular bitcoin and cryptocurrency in general became, the more developers started showing interest in launching their own currency.
Today there are hundreds of different cryptocurrencies, which all have their own unique name. Since most alternate cryptocurrencies are relatively unknown however, they are most often referred to as altcoins.